Overview of Financial Performance

Apollo Global Management, a leading alternative investment management firm, has reported its financial results for the three months ended March 31, 2025. The company’s performance was mixed, with strong results in its Retirement Services segment offset by a decline in its Asset Management segment.

Asset Management Segment

The Asset Management segment saw revenues increase by 1.1% to $1,046 million, driven by growth in management fees and advisory and transaction fees. Management fees rose 16.0% to $508 million, primarily due to higher fees from Athene, ADS, and the S3 Equity and Hybrid Solutions Fund. Advisory and transaction fees also increased 15.4% to $195 million.

However, investment income declined 24.6% to $303 million, primarily due to a decrease in performance allocations. Significant drivers for performance allocations in 2025 included Fund X, HVF II, Fund IX, Redding Ridge Holdings, and Credit Strategies, partially offset by losses from FCI II.

Expenses in the Asset Management segment increased 16.2% to $1,113 million, mainly due to higher compensation and benefits costs, as well as increased general, administrative, and other expenses. Compensation and benefits rose 11.7% to $745 million, with increases in profit sharing expense and salary, bonus, and benefits, partially offset by a decrease in equity-based compensation.

Retirement Services Segment

The Retirement Services segment saw revenues decrease 25.0% to $4,502 million, primarily driven by a $2.5 billion decline in investment related gains (losses). This was partially offset by a $765 million increase in net investment income and a $181 million increase in revenues from consolidated variable interest entities.

Expenses in the Retirement Services segment decreased 17.9% to $3,229 million, mainly due to a $1.4 billion decrease in interest sensitive contract benefits, partially offset by a $539 million increase in market risk benefits remeasurement losses, a $60 million increase in DAC, DSI, and VOBA amortization, and an $89 million increase in policy and other operating expenses.

Segment Performance

The Asset Management segment’s Fee Related Earnings (FRE) increased 21.0% to $559 million, driven by growth in fee-related revenues, including management fees, capital solutions fees, and fee-related performance fees. The Retirement Services segment’s Spread Related Earnings (SRE) decreased 1.6% to $804 million, primarily due to higher cost of funds and interest and other financing costs, partially offset by higher net investment earnings.

The Principal Investing segment’s Principal Investing Income (PII) decreased 33.3% to $14 million, primarily due to an increase in principal investing compensation expense, partially offset by an increase in realized performance fees.

Market Environment and Outlook

The report notes that the company is actively monitoring the developments in Ukraine resulting from the Russia/Ukraine conflict and the economic sanctions and restrictions imposed against Russia, Belarus, and certain Russian and Belarussian entities and individuals. As of March 31, 2025, the funds managed by Apollo have no investments that would cause the company or any Apollo-managed fund to be in violation of current international sanctions, and the direct exposure of investment portfolios to Russia and Ukraine is insignificant.

The report also discusses the impact of the interest rate environment on the company’s businesses. Athene, the company’s retirement services business, addresses interest rate risk through asset liability management and the use of floating rate investments and liabilities. The report notes that if prevailing interest rates were to rise, Athene’s products would likely become more attractive to consumers, and its sales would likely increase. Conversely, if interest rates were to decline significantly, the yield on Athene’s new investment purchases may decline, and its investment income from floating rate investments would decrease.

The report states that the institutional investor environment remains generally accommodative, with investors continuing to allocate capital towards alternative investment managers in search of more attractive returns. The company believes the business environment remains generally favorable for raising larger successor funds, launching new products, and pursuing attractive strategic growth opportunities.

Conclusion

Overall, Apollo’s financial performance in the first quarter of 2025 was mixed, with strong results in its Retirement Services segment offset by a decline in its Asset Management segment. The company remains focused on managing its exposure to market risks, such as interest rate and geopolitical risks, and continues to seek opportunities for growth and strategic expansion in the alternative investment space.